IN THE MATTER OF * BEFORE THE * ASHLEY, INC., d/b/a * MARYLAND * FATHER MARTIN’S ASHLEY * HEALTH CARE * Docket No. 13-12-2340 * COMMISSION * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Staff Report and Recommendation September 19, 2013 Table of Contents I. INTRODUCTION......................................................................................................... 1 A. The Applicant ............................................................................................................ 1 B. The Project ................................................................................................................ 1 C. Background ............................................................................................................... 2 C. Summary of Staff Recommendation ......................................................................... 3 II. PROCEDURAL HISTORY ......................................................................................... 4 A. Review of the Record ................................................................................................ 4 B. Local Government Review and Comment ................................................................ 6 C. Interested Parties in the Review ................................................................................ 6 III. STAFF REVIEW AND ANALYSIS ........................................................................... 6 A. COMAR 10.24.01.08G (3) (a)-THE STATE HEALTH PLAN ................................. 6 COMAR 10.24.14.05 .................................................................................................... 6 A. Facility Size ....................................................................................................... 6 B. Bed Need ............................................................................................................ 7 C. Sliding Fee Scale .............................................................................................. 10 D. Service to Indigent and Gray Area Patients ..................................................... 11 E. Information Regarding Charges ........................................................................ 15 F. Location ............................................................................................................. 16 G. Age Groups ........................................................................................................ 16 H. Quality Assurance ............................................................................................. 16 I. Utilization and Control ....................................................................................... 17 J. Transfer and Referral Agreements ..................................................................... 18 K. Sources of Referral ............................................................................................ 19 L. In-Service Education ......................................................................................... 19 M. Sub-Acute Detoxification ................................................................................. 20 N. Voluntary Counseling, Testing, and Treatment Protocols for HIV ................... 20 O. Outpatient Programs .......................................................................................... 20 P. Program Reporting ............................................................................................ 21 B. COMAR 10.24.01.08G (3)(b)-NEED ......................................................................... 21 C. COMAR 10.24.01.08G (3)(c)-AVAILABILITY OF MORE COST EFFECTIVE ALTERNATIVES ....................................................................................................... 23 D. COMAR 10.24.01.08G (3)(d)-VIABILITY OF THE PROPOSAL ........................ 26 i E. COMAR 10.24.01.08G (3)(e)-COMPLIANCE WITH CONDITIONS OF PREVIOUS CERTIFICATES OF NEED ................................................................ 29 F. COMAR 10.24.01.08G (3)(f)-IMPACT ON EXISTING PROVIDERS ................. 30 IV. STAFF RECOMMENDATION ................................................................................ 31 Appendix A – Site Plan and Floor Plans ii STAFF REPORT AND RECOMMENDATION I. INTRODUCTION A. The Applicant Ashley, Inc. operates Father Martin’s Ashley (“FMA”), an 85-bed intermediate care facility (“ICF”) for the care and treatment of patients with alcoholism and drug addiction, also known as an ICF-Chemical Dependency or ICF-CD. Located in Havre de Grace in Harford County, the facility is private, not-for-profit, and non-denominational. It is licensed by the Department of Health and Mental Hygiene to provide three levels of care: clinically managed high-intensity residential treatment, medically monitored intensive inpatient treatment, and medically monitored intensive inpatient treatment-detoxification. FMH opened in 1983 and operates on a 147-acre campus. The facility is named after Father Joseph Martin, a priest who received treatment for his alcoholism, and who later helped to establish this chemical addiction treatment center. The applicant offers all patients an inpatient treatment program, based on a 28-day model, and also provides medically supervised detoxification on site. FMA embraces the “twelve-step program” approach, a set of principles outlining a course of action for recovery from addiction originally developed by Alcoholics Anonymous over 70 years ago. It reports specialized programs that address patient relapse into addiction, the treatment of women, the treatment of young adults, the needs of families, and the needs of children living in homes affected by addiction. It operates an outpatient intervention program for persons convicted of driving under the influence of alcohol or drugs and driving while intoxicated. FMA employs a medical and clinical care staff that is addiction-certified. FMA is a unique health care facility Certificate of Need (“CON”) applicant in that it does not participate in and does not propose to participate in the Medicare or Maryland Medical Assistance (Medicaid) program. B. The Project The applicant proposes to construct a new two-story building, encompassing 41,824 gross square feet (“SF”) of new construction on its campus. The applicant’s 85 ICF beds are currently distributed over three existing buildings – Noble Hall, Carpenter Hall, and Bantle Hall. The proposed project is planned to address deficiencies in the existing physical facilities of FMA and the need for additional beds. The proposed project will add 15 “Track One” beds, increasing total bed capacity to 100. “Track One” or “private” beds are non-governmental ICF beds without significant funding by state or local government. The State Health Plan (“SHP”) defines a “Track One” facility as one that provides “no less than 30 percent of its annual patient days to the indigent and gray area population for an adolescent intermediate care facility and (as applicable to FMA) no less than 15 percent of the facility’s annual patient days for an adult ICF.” The SHP defines the 1 “indigent population” as “those persons who qualify for services under the Maryland Medical Assistance Program, regardless of whether Medical Assistance will reimburse for alcohol and drug abuse treatment” and it defines the “gray area population” as “those persons who do not qualify for services under the Maryland Medical Assistance Program but whose annual income from any source is no more than 180 percent of the most current Federal Poverty Index, and who have no insurance for alcohol and drug abuse treatment services.” Through the proposed project, FMA plans to eliminate nine rooms designed to accommodate three or four patients and eliminate four patient rooms that are currently located in attics that it does not consider suitable for patient occupancy. The project will increase the number of private patient rooms from eleven to twenty, consolidate and relocate the Admissions Department and Patient Intake into the new building, establish a permanent location for the Wellness/Fitness Center in the new building, and expand and consolidate other administrative and support spaces. The project will also include infrastructure improvements. FMA views the project as a means for upgrading and improving the level of its programs and allowing it to more effectively market its program to prospective patients. The total estimated cost of the project is $18,653,000, which includes $18,361,000 in total capital costs, and $292,000 in loan placement, legal, and consultant fees. The initial funding of the project is projected to come from $6 million in cash from the applicant, pledged funds of $4 million, and $1,653,000 in gifts and bequests that have already been received, with the balance of needed funds ($7 million) being borrowed. FMA expects that future fund raising will provide the necessary funds to replace or pay off the bond or letter of credit used for borrowing. C. Background In 2012, FMA petitioned MHCC to amend the docketing requirements of COMAR 10.24.14.04A and B, the State Health Plan chapter containing policies and standards for Certificate of Need (“CON”) review of projects by ICF for the treatment of alcohol and drug addiction. Those docketing rules addressed the occupancy rate to be attained by an ICF in order to docket an application for expansion, the percentage of total proposed bed days that a “Track One” ICF applicant must propose for indigent and